Canadian stocks rose to the highest level in two years, after U.S. economic reports fueled speculation Federal Reserve policy makers will continue stimulus measures as they begin two days of meetings.
Thomson Reuters Corp. climbed to a two-year high after disclosing it will buy back some of its shares and cut 3,000 positions in a bid to focus on growth. Sears Canada Inc. jumped 6 percent after deciding to terminate five leases, including its flagship location in Toronto. Bank of Nova Scotia and Toronto-Dominion Bank rose more than 1 percent to pace gains among the nation’s largest lenders as financial shares rallied.
The Standard & Poor’s/TSX Composite Index rose 68.77 points, or 0.5 percent, to 13,440.61 at 4 p.m. in Toronto. The benchmark Canadian equity gauge has advanced 5.1 percent in October, for the biggest monthly gain in two years.
“The recent government shutdown and continued uncertainty about U.S. fiscal policy are expected to keep growth little changed through the end of the year,” said Paul Ferley, assistant chief economist with RBC Capital Markets, in a note today. “These recent developments weigh in favor of the Fed leaving the pace of asset purchases unchanged.”
Central bank policy makers meet today and tomorrow to consider whether to scale back the $85 billion a month of stimulative bond purchases. The Fed support has helped fuel a rally in global equities.
Retail sales in the U.S. declined 0.1 percent in September, restrained by the biggest decrease at auto dealers since October 2012. Confidence among U.S. consumers declined in October by the most since August 2011 as the 16-day government shutdown took a toll on outlooks.
President Barack Obama’s nomination of Janet Yellen, vice chairman of the Fed, to succeed Ben S. Bernanke as chairman at the end of January has added to speculation the central bank will not make any changes to its policy.
“When you have a new person coming in, they won’t do anything dramatic at all,” said David Cockfield, fund manager with Northland Wealth Management in Toronto. He helps manage C$225 million ($216 million) with the firm. “In times like these you do as little as possible and with the threat of further interparty fighting, you want to remain soft, accommodative and don’t introduce anything else that will cause stress or strain.”
Thomson Reuters gained 3.4 percent to C$38.60, the highest since April 2011, as consumer discretionary stocks added 1.2 percent as a group. Eight of 10 industries advanced on trading volume 7.2 percent lower compared with the 30-day average.
Thomson Reuters, a provider of news and information services, plans to cut 3,000 positions, or about 5 percent of the workforce, to focus on growth markets and boost profitability.
The company also reported higher-than-projected earnings of 48 cents a share in the third quarter, compared with 44 cents estimated by analysts.
Sears Canada increased 6 percent to C$14.35, the highest close in almost two years. The department store retailer is selling five store leases to Cadillac Fairview Corp. for C$400 million, including its flagship location in the Toronto Eaton Centre.
In the U.S., parent Sears Holdings Corp. is considering separating its Lands’ End and auto center units to raise cash.
Toronto-Dominion Bank rallied 1 percent to C$95.15 and Scotia Bank advanced 1.1 percent to C$63.54 as both lenders extended record highs. The S&P/TSX Banks Index climbed 1 percent, extending a record as it gained for the 13th time in the last 14 sessions.
Talisman Energy Inc. rose 2.6 percent to C$13.25 and Suncor Energy Inc. added 1.4 percent to C$38. Crude slipped for the first time in four days.
Imax Corp., the big-screen cinema technology company, gained 1.8 percent to C$30.94. Imax will develop and produce in-home theater systems in partnership with Hong Kong-based TCL Multimedia Technology Holdings Ltd. The first products will be introduced in China and other unspecified global markets in 2015.